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Re: What Happens if America Can't Pay Debt?

If the US defaulted on its debt, both our economy and China's would collapse, and probably the entire world economy along with it. It's all inter-connected and the USA defaulting on its debt would entail the complete devaluing of the US dollar, which many countries have their reserves in.

Re: What Happens if America Can't Pay Debt?

Originally Posted by Justinian

If the US defaulted on its debt, both our economy and China's would collapse, and probably the entire world economy along with it. It's all inter-connected and the USA defaulting on its debt would entail the complete devaluing of the US dollar, which many countries have their reserves in.

The US is too big to fail, essentially.

This is why China was making noise about a global supercurrency. It's badly overexposed on the dollar, and is afraid (rightly) of US inflation.

"Every idea is an incitement. It offers itself for belief and if believed it is acted on unless some other belief outweighs it or some failure of energy stifles the movement at its birth. The only difference between the expression of an opinion and an incitement in the narrower sense is the speaker's enthusiasm for the result. Eloquence may set fire to reason." -Oliver Wendell Holmes Jr.

Re: What Happens if America Can't Pay Debt?

i dont understand how the U.S. would be so affected, we wipe the debt clean and now we couldnt buy overseas products but would that be so bad? we would have to make things here, i know i probably sound niave on this issue and thats becuase i am, so enlighten a man

I come in peace, I didn't bring artillery. But I am pleading with you with tears in my eyes: If you F___ with me, I'll kill you all.
- Marine General James Mattis, to Iraqi tribal leaders

Re: What Happens if America Can't Pay Debt?

Originally Posted by Pickle_mole

i dont understand how the U.S. would be so affected, we wipe the debt clean and now we couldnt buy overseas products but would that be so bad? we would have to make things here, i know i probably sound niave on this issue and thats becuase i am, so enlighten a man

Well US isn't exactly self-reliant on many key resources and goods that its people's standard of living depends on (oil especially). Basically US economy will go back to barter and standard of living to pre-19th century lol. Not that bad i guess. Though most people's savings will be gone though, except property owners.

Re: What Happens if America Can't Pay Debt?

Originally Posted by mkesadaran

So then why the hell would countries lend their money when the people can't pay them back?

To build off what Justinian said, the government also sells bonds and is in effect a debtor to its own citizens. Because bonds are repaid with interest, the government sells more bonds each year to pay back the interest incurred on the previous year's bond repayments. Short term fixes, sure, but the debt just continues to get bigger.

Re: What Happens if America Can't Pay Debt?

could we not recover our currency, who else would the sauds sell to? lets assume we wipe our debt, our dollar plummets. The sauds need us to buy their oil, if not they will plummet too, so we could put in place measures to rehab our dollar while purging our debt, not too bda imo

I come in peace, I didn't bring artillery. But I am pleading with you with tears in my eyes: If you F___ with me, I'll kill you all.
- Marine General James Mattis, to Iraqi tribal leaders

Re: What Happens if America Can't Pay Debt?

Originally Posted by Pickle_mole

could we not recover our currency, who else would the sauds sell to? lets assume we wipe our debt, our dollar plummets. The sauds need us to buy their oil, if not they will plummet too, so we could put in place measures to rehab our dollar while purging our debt, not too bda imo

Other countries would just step in to fill the void and start buying. The price would probably drop as well.

Re: What Happens if America Can't Pay Debt?

Originally Posted by Pickle_mole

could we not recover our currency, who else would the sauds sell to? lets assume we wipe our debt, our dollar plummets. The sauds need us to buy their oil, if not they will plummet too, so we could put in place measures to rehab our dollar while purging our debt, not too bda imo

sell you in exchange for what? Weapons? certainly. But not gonna be dollar until you pay the money back lol. If you pay them money, what if you default again? They are not stupid. It's a horrible idea lol. Basically US economy will stay in barter until they repay their debt.

and dont worry, tons of countries need oil, don't forget china that is buying up all the oil it needs. Saudis dont have to worry about it.

Re: What Happens if America Can't Pay Debt?

Today's currency is fiat currency, that is, its value depends only in people's "faith" in it. This means that, given the USA produce mainly nothing and live mainly from credits (the interests of which will be paid with more credits), at some point or another people will stop selling or buying them things, and they might even ask their money back, probably not in currency, but in goods, such as land, resources.... To this the "1st world power", could do two things: Accept that they had been living a life they could not afford and that they would not be able to keep for any longer, Or get very angry first and accept it afterwards. (The "getting angry" phase may be accompanied by some nuclear missiles, which may destroy everything, but will not solve their problem...)

Re: What Happens if America Can't Pay Debt?

"Every idea is an incitement. It offers itself for belief and if believed it is acted on unless some other belief outweighs it or some failure of energy stifles the movement at its birth. The only difference between the expression of an opinion and an incitement in the narrower sense is the speaker's enthusiasm for the result. Eloquence may set fire to reason." -Oliver Wendell Holmes Jr.

Re: What Happens if America Can't Pay Debt?

You missed the part about the exports increasing faster than imports....

"Every idea is an incitement. It offers itself for belief and if believed it is acted on unless some other belief outweighs it or some failure of energy stifles the movement at its birth. The only difference between the expression of an opinion and an incitement in the narrower sense is the speaker's enthusiasm for the result. Eloquence may set fire to reason." -Oliver Wendell Holmes Jr.